Convicted Con Artist Shows System Flaws That May Result In Home Thefts
For the whole story, reported by USA Today at usatoday.com, see:
Convicted con artist shows how system flaws could allow him to steal your home
Welcome to The Home Equity Theft Reporter, a blog dedicated to informing the consumer public and the legal profession about Home Equity Theft issues. This blog will consist of information describing the various forms of Home Equity Theft and links to news reports & other informational sources from throughout the country about the victims of Home Equity Theft and what government authorities and others are doing about it.
While I'm sure that there may be real estate lawyers who "say" this, readers of this blog and savvy consumer protection and real estate attorneys know that, when invoking the "equitable mortgage" doctrine in order to treat a foreclosure rescue arrangement simply as a secured (& possibly usurious) loan, courts are not limited to reviewing the written documents. They are to listen to the testimony of the parties and look to all of the surrounding facts and circumstances when determining whether a deed transfer with a simultaneous lease back / buy back arrangement is an equitable mortgage.
(Florida has codified the equitable mortgage doctrine at Chapter 697.01 of the Florida Statutes.)
Further, in a prior blog post, I referred to the recent Florida appellate court case, Guest v. Claycomb, 932 So. 2d 567 (Fla. App. Ct. 5th Dist., 2006), which reminds us that Florida courts (and I'm sure non-Florida courts as well) have long held that when someone brings legal action in a case involving a written contract and specifically requests some form of "equitable relief", the court will not limit their review solely to the written documents. They are duty bound to listen to and consider the oral testimony of all witnesses in the transaction as well as to look to all of the surrounding facts and circumstances in determining what actually happened (unfortunately for the homeowner in this case, the trial judge apparently disregarded this legal principle and ruled incorrectly against him; fortunately for the homeowner, however, he had an attorney who was prepared to appeal the incorrect decision to a state appeals court which did, in fact, reverse the lower court decision).
To read the entire Sun-Sentinel article by Ian Katz, see:
Facing foreclosure? Beware of 'rescue firms' offering to help you
Click here for the prior post referencing Guest v. Claycomb.
Click here for a prior post of a foreclosure rescue operator who violated Federal Truth In Lending and state usury law.
Click here to search for other blog posts on equitable mortgages on this blog.
(revised 1-26-07)
See related article reported by the Arizona Daily Star at azstarnet.com:
(revised 1-23-07, 6:46 a.m.)
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(revised 8-11-07)
Attorney Marvin Bagwell, Esq., of United General Title Insurance Company (a subsidiary of First American Title Insurance Company) has written this Title Advisory on the NYS Home Equity Theft Prevention Act (made available online by Benchmark Title Agency, LLC).
This article offers a brief discussion of four features that have an immediate impact on title insurance underwriters doing business in New York. The article is written for industry professionals, so if you are in the title insurance industry or legal counsel for mortgage lenders doing business in New York, you might find this information helpful.To obtain a copy of the New York Home Equity Theft Prevention Act, please refer to my January 4, 2007 post and my January 12, 2007 post.
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To read the entire story (which is loaded with details) and is Part 2 of a South Bend Tribune story I posted on yesterday, see:
Whistle-blower backs alleged victims' claims of mortgage fraud, reported at SouthBendTribune.com.
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A wave of mortgage fraud known as "cash back" deals is rippling through Arizona. The fraud involves getting phony appraisals which falsely represent the value of a home, obtaining a mortgage for more than the home is worth and pocketing the extra money in cash.
Whether it's organized groups of speculators that have bought multiple homes this way or individual deals done by amateurs, this type of mortgage fraud has become a concern for Arizona regulators. Reportedly, in one neighborhood, a group of buyers has been selling and reselling homes to one another.
Calls from homeowners, real estate agents and lenders asking if the "cash back" deals are legal are increasing every month and now come in every day, according to Felecia Rotellini, the head of the Arizona Department of Financial Institutions. She recently hired two consumer complaint investigators and plans to devote the bulk of her agency's resources to investigating mortgage fraud.
In November, Rotellini organized a mortgage fraud task force that includes the Arizona Department of Real Estate, Arizona Housing Department, FBI, Housing and Urban Development, IRS and State Board of Appraisers. They plan to share information and collaborate on cases. Reportedly, local police departments will also be working with the new task force.
To read the entire story, see Valley fighting mortgage fraud wave, reported in The Arizona Republic at azcentral.com. You can also find links to the following series of Channel 12 video reports:
Click below to read other mortgage fraud articles published this week by The Arizona Republic:
In the civil lawsuit, the homeowner (represented by attorney Joshua Cohen) alleged violations of California's Home Equity Sales Contract Act, the Mortgage Foreclosure Consultants Act, fraud, civil conspiracy to commit fraud and unfair business practices, intentional infliction of emotional distress, and undue influence. The defendants in this case include the pastor, the man arranging the transaction, the purported new owner, and others.
To read more, click below for the article, as reported in the East Bay Business Times:
Mortgage fraud cases multiply, hit more homeowners
Homeowner sues pastor, others
For those seeking legal assistance or representation in California, see my blog post immediately preceeding this one.
Editor's Note:
As a personal observation, in cases such as this one (and the one in the blog post preceeding this one), where a victimized homeowner retains possession of the home after a purported sale, this possession under the law generally imparts what experienced real estate lawyers refer to as "notice to the world" that the person in possession of the premises may have a legal interest in the home (whether this "notice" is considered to be "actual notice", "constructive notice", or "inquiry notice" under California law, I welcome input from any California real estate attorneys).
This point may be significant to the victimized homeowner because if, after litigation, the homeowner is successful in voiding the sale, and the holders of any subsequent intervening interests (in the above case, the purported interests of the new buyer and the mortgage company that financed the new purchase) are deemed to have had this "notice to the world", it seems to me that the homeowner should be entitled to get the home back free from any claims of the new buyer or bank. (Being deemed as being "on notice" may possibly "disqualify" the new buyer or mortgage company of the legal status of being a "bona fide purchaser for value, and without notice.") For any victimized homeowners and others wanting more information on this point, seek out a competent, experienced real estate attorney in your home state.
Should this be the case, then the new buyer and the bank or mortgage company financing the purchase would end up "holding the bag". However, if they each obtained a title insurance policy to protect their interests as part of the purchase, then it seems to me that they may have a "title claim" to submit to the title insurance company issuing the policy (I wonder how title insurance companies are dealing with issuing title policies in foreclosure rescue situations. If anyone knows of any cases or articles addressing the ramifications to the title insurance industry in connection with foreclosure rescue issues, please drop me a line by clicking "Comments" below).
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Former Indianapolis patrolman gets 57 months for fraud, Associated Press wire report at The News-Sentinel at FortWayne.com.
revised 1-19-07 (4:11 p.m.)